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Workday, Inc. 8-K Report, Financial Results (Feb 26, 2024)

Reports
Earnings & Results·Other Events·Exhibits & Filings
Filing Date
Filed February 26, 2024
Period End
February 26, 2024
Security
WDAY
In the record · 2016–202610-K1110-Q328-K112

WDAY filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 112 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Aug ’18Aug ’18
  2. Leadership change8-K · Aug ’20Aug ’20
  3. Leadership change8-K · Dec ’22Dec ’22
  4. Material agreement8-K · Oct ’26Oct ’26

01—Abstract

Summary

Summary of the 8-K filed February 26, 2024. Cited figures are marked; the original filing is the authoritative source.

Workday reported fiscal 2024 fourth-quarter and full-year results (quarter ended January 31, 2024) that showed strong top-line growth and expanding profitability.

Q4 total revenue was $1.9 billiona, up 17% year over year, with subscription revenue of $1.8 billion, up 18%. Full-year total revenue reached $7.3 billion (up 17%) and subscription revenue $6.6 billion (up 19%). Non-GAAP operating margin expanded to 23.9% in the quarter and 24.0% for the year, versus 18.5% and 19.5% a year earlier.

Total subscription backlog grew 27% to $20.9 billion, and free cash flow rose to $1.9 billionb from $1.3 billion. GAAP results were flattered by a one-time $1.1 billion release of the valuation allowance on U.S. federal and state deferred tax assets, which produced a Q4 GAAP net income of $1.19 billion and diluted EPS of $4.42. GAAP operating income was modest at $183 million for the full year (2.5% margin), with share-based compensation of $1.4 billion the main reason GAAP profitability lags non-GAAP.

Investors should therefore focus on operating cash flow and non-GAAP metrics rather than the reported EPS spike, which is non-recurring. Management reiterated fiscal 2025 subscription revenue guidance of $7.725 billion to $7.775 billionc (17% to 18% growth) and expects a non-GAAP operating margin of about 24.5%.

The company also announced a new $500 milliond share repurchase authorization running 18 months, after repurchasing about $423 million of stock in fiscal 2024, and a pending acquisition of HiredScore. Leadership changed as Carl Eschenbach became CEO effective February 1, 2024, while co-founder Aneel Bhusri moved to executive chair.

02—Key points

Key Highlights

  1. Fiscal Q4 2024 total revenue of $1.9B (+17% YoY) and subscription revenue of $1.8B (+18% YoY); full-year revenue of $7.3B (+17%).
  2. Subscription revenue backlog reached $20.9B, up 27% YoY, with 12-month and 24-month backlog each up 20%.
  3. Full-year non-GAAP operating margin expanded to 24.0% from 19.5%, while GAAP operating margin was 2.5%.
  4. Free cash flow rose to $1.9B for the year from $1.3B, and operating cash flow grew 30% to $2.1B.
  5. A $1.1B one-time deferred tax valuation allowance release inflated Q4 GAAP net income to $1.19B and diluted EPS to $4.42; this is non-recurring.
  6. FY2025 guidance reiterated: subscription revenue of $7.725B–$7.775B (17%–18% growth) and ~24.5% non-GAAP operating margin.
  7. New $500M share repurchase program over 18 months, following $423M of buybacks in fiscal 2024; also announced pending acquisition of HiredScore and CEO transition to Carl Eschenbach.

03—Questions

Frequently Asked Questions

  1. Why did Workday's GAAP EPS jump so sharply in the fourth quarter?

    Q4 GAAP diluted EPS of $4.42 was driven by a $1.1 billion release of the valuation allowance against U.S. federal and state deferred tax assets, which produced a large income tax benefit. This is a one-time accounting item, so underlying operating performance (GAAP operating income of $79M in Q4) is a better guide to ongoing profitability.

  2. How much profitability is Workday generating on a non-GAAP basis versus GAAP?

    For fiscal 2024, GAAP operating margin was 2.5% while non-GAAP operating margin was 24.0%. The gap is mainly share-based compensation of $1.416 billion, plus employer payroll taxes on stock transactions and acquisition-related amortization. Investors should weigh how much of that excluded compensation is a real economic cost.

  3. What does the company expect for fiscal 2025?

    Management reiterated fiscal 2025 subscription revenue guidance of $7.725 billion to $7.775 billion, implying 17% to 18% growth, and expects non-GAAP operating margin of approximately 24.5%, indicating continued margin expansion alongside incremental investment.

  4. What is the new $500 million share repurchase program?

    Workday's board authorized repurchases of up to $500 million of Class A common stock over an 18-month term, via open market purchases, private transactions, or Rule 10b5-1 plans. The program can be suspended or discontinued at any time and does not obligate the company to buy any specific amount. In fiscal 2024 Workday repurchased about $423 million of stock.

  5. Is the company's cash position and backlog healthy?

    Cash, cash equivalents, and marketable securities totaled $7.8 billion as of January 31, 2024. Total subscription revenue backlog was $20.9 billion, up 27% YoY, and 12-month backlog of $6.6 billion and 24-month backlog of $11.7 billion each grew 20%, suggesting strong revenue visibility.

04—Continue

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